Market Wrap: Wall Street Sees Best 2-Day Gain Since 2011

NEW YORK -- The S&P 500 closed out its biggest two-day advance since November 2011 on Thursday, extending a Federal Reserve-fueled rally from the previous session, while tech shares jumped after Oracle results.

The Dow industrials recorded the best one-day percentage gain since December 2011. The S&P 500 posted its biggest daily percentage gain since January 2013 and is up 4.5 percent in the last two sessions.

Equities' rally followed the Fed's upbeat assessment of the U.S. economy on Wednesday and a commitment to take a "patient" approach toward raising interest rates.

"What happened this week was a game-changer. That easy money trade came to the forefront, and it's so powerful it wipes out all of these concerns that exist," said Adam Sarhan, chief executive of Sarhan Capital in New York.

The S&P 500 had fallen nearly 5 percent from its most recent record high on Dec. 5 before the strong gains on Wednesday and Thursday.

Earlier in the session, data showed weekly jobless claims fell more than expected, suggesting the labor market continues to strengthen. However, readings on the U.S. services sector and mid-Atlantic factory activity indicated a slower pace of growth.

If you don't already have one, now's the time to establish a traditional individual retirement account or a Roth IRA, and if you're self-employed, a Solo 401K or SEP-IRA. Don't worry if you don't have enough money to fully fund the account. As long as you establish the account by the end of the calendar year, you'll be able to retroactively contribute to it through April 15 of next year, and those funds can still count toward your 2014 taxes.

For 2014, you're allowed to contribute up to $17,500 to your 401(k). (If you're 50 and over, that limit increases to $23,000.) This is the maximum you're able to save per year and still defer paying income tax on that money.

Since 401(k) contributions must be made through payroll deductions, talk to your company's payroll department about adjusting your December contribution or adding a lump-sum amount from your holiday bonus when you receive it. Also, chat with your human resource department to see if it will let you retroactively earmark contributions made prior to April 15, 2015 for the 2014 tax year.

If you're age 70½ or older, you're required to take a certain amount from your 401(k) and traditional IRA each calendar year. If you don't, you could be facing sizable penalty fees from the IRS (as in 50 percent of the amount you should have taken out). To find out how much you should take out by the end of the year, talk to your financial adviser or see this calculator.

You may qualify for a state income tax deduction by contributing to your children's 529 college savings plan.While every state's 529 tax deduction rules and contribution limits vary, most states will accept contributions until all account balances for the same beneficiary reach $235,000 to $412,000. Check with your state to discover your specific limits.

Depending on your financial situation, converting some of the funds from your traditional IRA into a Roth IRA could be a smart strategy. You're able to withdraw the funds from a Roth IRA tax-free, and Roth IRAs are excluded from required minimum distribution rules. Furthermore, if you're ineligible to contribute to a traditional or Roth IRA due to income limitations, you can still contribute to a "nondeductible" traditional IRA and then process what's known as a "backdoor" Roth conversion.

When you sell stocks for a gain, you face capital gains taxes. But you can counterbalance these gains by selling some of your "losing" stocks and writing off the losses. Talk with your accountant about whether this strategy would work for you; if it will, you need to harvest your losses before the year closes out.

Do you have a flexible spending account, or FSA, at work? Check the detail of your company's policy; many are "use it or lose it," meaning if you don't use the full amount in your FSA by year's end, that money will not roll over.

New federal laws permit employers to let their workers roll over a maximum of $500, but it's the employers choice whether or not to allow this rollover. Also, some employers give their workers a grace period until March of the following year to use the prior year funds, while other employers require that the funds are used by Dec 31. Check with your HR department to learn your employers' rules.

Remember that FSA funds can be used for a lot more than just prescriptions and co-pays. If you have money you need to spend before it's gone, you may also be able to use it for things like dental work, glasses or contact lenses, and even some qualified over-the-counter medicine and supplies.

Secure some additional tax deductions for 2014 by donating to a charitable cause. As long as you itemize your donations, you can claim everything from cash donations to goods to used vehicle donations. You can even give some of your stock to charity, thus avoiding capital gains tax.

Just be sure to get a signed and dated receipt from the charity, noting the amount of your contribution -- especially if you're donating goods instead of cash. As an added precaution, take photographs of any high-value donations (over $250).

You may qualify for another tax credit by making energy-efficient home improvements like windows, insulation and roofing. You'll also save more in the long run on your home's heating and cooling costs. To see which improvements qualify for a tax credit, go to the federal government's energy savings website, which lists comprehensive details that are broken down state-by-state.

If you need to enroll for coverage on the healthcare exchanges, you have until Dec. 15, 2014 to sign up for coverage that begins on Jan. 1, 2015. If you're already enrolled in a marketplace plan, you may be able to change your coverage if you've had a qualifying life event, such as a marriage or a move to another state.

You can give up to $14,000 to individuals per year without needing to file a gift tax return. If you're married, you and your spouse can each bequeath gifts of $14,000 to an individual without triggering a taxable event. If you decide to give a major financial gift to your children, talk to your kids first about strong money-management skills. Here's a free guide to help to talk to your kids about money.

Giving a little bit each year can also help reduce your overall estate tax burden (although the estate tax exemption is $5.34 million in 2014, which means few taxpayers will need to worry about this).